Dear Mayor Patrick:
You requested an opinion from this office regarding surplus funds in your Debt Service fund accounts. You asked whether the Town has to pay off the outstanding bonds before any surplus monies can be used for purposes similar to that of the original issue. Your request is similar to one in which an opinion was rendered in Op. Atty. Gen. 1946-48, p. 873.
In the 1946-48 opinion, it was stated that the proceeds of school district bonds, created by the levy of a special tax, must be used to pay the principal and interest of the bonds as they mature. After the bonds have been paid in full, both in principal and interest, any unexpended balance resulting from the collection of the tax belongs to the taxpayers of the school district and must be returned to the taxpayers if practical. If not practical to do so, the funds may be expended for a purpose similar to that for which the bonds were originally issued.
It is the opinion of this office that the proceeds of the tax must be used to pay the principal and interest of the bonds until paid in full. No monies can be taken out of the Debt Service Fund, except for the payment of debt service, unless and until, the bonds are paid in full.
Trusting this adequately responds to your request, I remain,
Yours very truly,
RICHARD P. IEYOUB Attorney General
BY: MARTHA S. HESS Assistant Attorney General
RPI/MSH/jav 2890m